When there is no agreement between comrades, their business does not go well. Russia and Saudi Arabia again, as in the spring of 2020, have different points of view about the future prospects of the global economy and demand for black gold, which reminds investors of the oil war between them, which for the first time in history brought the price of the Texas grade below zero. It is unlikely that history will repeat itself, but the conflict between Riyadh and Moscow does not promise a quiet life for Brent and WTI bulls.

The postponement of the OPEC+ meeting seriously spoiled the mood of fans of black gold. According to a Reuters insider, three options are discussed at the meetings: an increase in production by 500,000 b/d beginning February, a reduction in production by 500,000 b/d, and its preservation at the same level. In my opinion, the second one can be safely discarded. Russia is leaning toward the former, most other countries are leaning toward the latter, and the divergence of views is unnerving financial markets.

Moscow is confident that mass vaccination will contribute to the recovery of the global economy and demand for black gold. At the same time, further OPEC+ restrictions will revive competitors – American producers. Iraq does not seem to be going to comply with the rules set by the cartel. According to data tracked by Bloomberg, crude oil shipments from Iraq rose to 3.26 million b/d in December.

Dynamics of Iraqi oil export and production

Saudi Arabia, on the other hand, urges allies to be cautious. It is not necessary to put at risk what OPEC+ has achieved for the sake of illusory benefits. The new COVID-19 variant is worrisome and unpredictable. The number of hospitalizations in the United States does not get tired of rewriting historical highs, Britain goes to the third lockdown, and a state of emergency is introduced in Tokyo. Is it possible to stop maintaining stability in the oil market in such conditions?

The split in the ranks of the allies makes the "bulls" for Brent and WTI doubt the feasibility of continuing their own attacks. Current events are reminiscent of the spring of 2020, when, due to Russia's reluctance to cut production, Saudi Arabia responded with an increase in production, which dealt a crushing blow to prices. Moreover, one of the reasons for the December rally of black gold was the expectation that in January OPEC+ will not make adjustments to its plans. Today, because of the disappointment, the market risks going down.

In my opinion, now is not the time for discord. Yes, the medium and long-term prospects for the global economy look optimistic, but in the short term, it will face difficult times. Limited vaccine production, logistical difficulties, and a lack of skilled labor make it difficult to get rid of the pandemic. OPEC+ needs to take all risks into account and compromise.

Technically, even a correction of Brent in the direction of the target by 88.6% on the Shark pattern will not change the overall balance of power. Oil has set itself benchmarks for growth within the framework of the Wolfe Wave model and is ready to implement them. Recommendations for buying on pullbacks with targets at $54.3 and $56.5 per barrel remain in effect.

Brent daily chart